July 31 (Bloomberg) -- Congress should retain tax cuts
passed under former President George W. Bush without offsetting
the $40 billion cost of including families earning more than
$250,000, said Indiana Representative Mike Pence, the third-ranking U.S. House Republican leader.

“It is imperative that we preserve the tax relief,”
Pence, chairman of the House Republican Conference, said in an
interview on “Political Capital with Al Hunt” airing this
weekend on Bloomberg Television. “I also believe that if we get
the economy moving again and provide both tax relief and reform
going forward, that as the economy expands federal revenues will
expand.”

Pence, a fifth-term lawmaker, was lukewarm to a suggestion
by Erskine Bowles, co-chairman of President Barack Obama’s
national debt commission, that three-quarters of budget
savings should come from spending cuts and the rest from tax
increases. The tax-boost idea would get “very little support
among Republicans” in the Capitol, Pence said.

“Raising taxes during the worst economy in 25 years is a
profoundly bad idea and I won’t support it,” he said.

The Bush-era income tax cuts expire at the end of this
year. Obama and congressional Democrats want to extend them for
households earning up to $250,000 and let them end for wealthier
taxpayers. Republicans insist on keeping the tax cuts for all
income levels without reducing spending or raising taxes
elsewhere to make up for the cost.

About three months before midterm elections, Pence said
he’s optimistic that Republicans may be able to retake control
of the House, though he didn’t predict the odds of a change in
control.

‘Genuine Opportunity’

“I think House Republicans believe we have a genuine
opportunity to win back the majority of the House of
Representatives,” Pence said. The party lost its previous
majority in the 2006 elections.

The top priorities of a Republican majority would be “to
get this economy moving again and to get federal spending under
control,” he said. Asked about Obama’s health-care overhaul,
Pence, 51, said repealing it remains a goal.

“I believe House Republicans are going to work to repeal
Obamacare lock, stock and barrel,” he said. “Obviously, the
president will be in office in 2011. He certainly would have the
ability to veto any effort that we make.”

House Republicans would nevertheless seek a debate over how
to better control health-care costs and could use their power
over House spending bills to make changes, he said.

Engine Issue

While Republicans are making fiscal discipline a top issue,
Pence defended a speech he made on the House floor supporting
approval of funds for General Electric Co.’s backup engine for
the F-35 Joint Strike Fighter. A factory in his district would
benefit if the House approved the $450 million cost of
continuing development of the engine.

U.S. Defense Secretary Robert Gates says a second engine is
a wasteful expense, and Obama has threatened to veto legislation
that includes the funding.

Pence pointed to a study by the Heritage Foundation, a
conservative research group in Washington, that said the U.S.
should have more than one source for an engine produced under a
defense contract that will span decades.

“The fact that one of those two engines in part is
manufactured in Indiana, we certainly welcome,” Pence said. “I
really do believe that it was in the interest of our national
defense and in the interest of fiscal responsibility.”